Tiffany & Company
) posted better-than-expected fourth-quarter fiscal 2012 results
due to surge in demand in the Asia-Pacific region. The quarterly
earnings of $1.40 per share beat the Zacks Consensus Estimate of
$1.37, and rose marginally by 0.7% from $1.39 earned in the
Let's Unveil the Picture
Tiffany, which faces stiff competition from
Signet Jewelers Limited
), posted net sales of $1,235.8 million during the quarter, up 4%
from the prior-year quarter, on the heels of healthy performance
of stores in the Americas, Asia-Pacific and Europe regions and
due to new collection launches.
However, total revenue fell short of the Zacks Consensus
Estimate of $1,255 million. In constant currencies, net sales
jumped 5%, whereas comparable-store sales remain unchanged.
By geographic segment, sales in the Americas grew 2% to $620
million, but comps fell 2% during the quarter; sales in the
Asia-Pacific region climbed 13% to $254 million, whereas comps
increased 8%; sales in Japan dropped 6% to $192 million and comps
declined 6%; and sales in Europe jumped 3% to $146 million and
comps inched up 1%. Other sales nearly surged twofold to $24
In constant currencies, sales in the Americas rose 2%, but
comps edged down 2% during the quarter; sales in the Asia-Pacific
region grew 10%, whereas comps rose 6%; sales in Japan advanced
2%, while comps grew 2%; and sales in Europe climbed 3%, whereas
comparable-store sales remained equal.
Gross profit for the quarter increased 2% to $730.8 million,
however, gross margin contracted 130 basis points to 59.1% due to
rise in precious metal and diamond costs, and lower margin
Tiffany opened 28 outlets during fiscal 2012, including 13 in
the Americas, 8 in Asia-Pacific; 2 in Europe and 5 in the United
Arab Emirates (U.A.E.). The company plans to add net 14 stores in
fiscal 2013 with 5 in the Americas, 7 in Asia-Pacific, 3 in
Europe and closing 1 location in Japan.
As of Jan 31, 2013, the company operated 275 stores (115 in
the Americas, 66 in Asia-Pacific, 55 in Japan, 34 in Europe and 5
in the U.A.E.).
Other Financial Details
Tiffany ended the quarter with cash and cash equivalents of
$504.8 million, and total short-term and long-term debt of $959.3
million, reflecting 37% of shareholders equity compared with 30%
in the prior-year.
The company generated $328.3 million of cash flow from
operating activities and incurred capital expenditures incurred
of $219.5 million, resulting in free cash flow of $108.8 million
during fiscal 2012. Management forecasted capital expenditures of
approximately $230 million and free cash flow of $300 for fiscal
During fiscal 2012, Tiffany had repurchased about 813,000
shares at $66.54 each, aggregating $54 million. The company did
not buyback any share during the quarter under review, and still
has $164 million remaining under its share repurchase
authorization slated to expire in January 2014.
Strolling Through Guidance
Tiffany now projects fiscal 2013 earnings in the range of
$3.43 to $3.53 per share, reflecting year-over-year growth of 6%
to 9%. However, for the first quarter of fiscal 2013, the company
forecasted a decline of 15% to 20% in net earnings from
operations attributable to gross margin pressure and increase in
costs associated to marketing.
The current Zacks Consensus Estimates for the first quarter
and fiscal 2013 are 65 cents and $3.49 per share.
Tiffany now expects total net sales growth of 6% to 8% for
fiscal 2013. In constant currencies, total net sales are
projected to increase in the high-single-digit buoyed by sales
growth in all regions, from mid-teens growth in Asia-Pacific to a
low-single-digit jump in Japan.
Tiffany currently has a Zacks Rank #3 (Hold). Other retail
stock that look promising and is expected to continue with its
upbeat performance is
Gildan Activewear Inc.
), which carries a Zacks Rank #2 (Buy).
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